Islandsbanki hf · OMXICE:ISB
Islandsbanki hf — FY2013 Earnings Presentation
31 slides from Islandsbanki hf's earnings presentation, Feb 20, 2014
Slide 1: FY2013 Financial Results
FY2013 Financial Results 20 February 2014
Slide 2: Table of Contents
Table of Contents I. Overview II. Income Statement III. Assets & Restructuring 2013 IV. Liabilities, Liquidity & Capitalisation
Slide 3: Overview
FY13 OVERVIEW
Slide 4: A strong bank ready for a sustainable future
A strong bank ready for a sustainable future Serving over 200,000 customers, Íslandsbanki has market share of +30% in retail and 37% in corporate 1. INCOME MIX IS CHANGING AS 2. COSTS PROGRAMS ARE DELIVERING RESULTS RESTRUCTURING COMES TO AN END Administrative expenses excluding one‐offs, was down
Slide 5: Universal bank with client focus
Universal bank with client focus Awarded ‘Best bank in Iceland’ by Euromoney and ‘Best Wealth Management’ by World Finance 5
Slide 6: The leading bank in Iceland
The leading bank in Iceland Leading market shares in all business segments and considered the most professional bank WHICH BANK IS THE LEADING WHO IS YOUR FIRST CHOICE WHICH BANK IS MOST WHICH BANK BEST SERVES BANK FOR INDIVIDUALS? FOR ASSET MANAGEMENT? PROFESSIONAL FOR SMEs? SMEs? 42% 27% 34% 34% 1
Slide 7: Financial overview
Financial overview Strong ROE despite high capital levels, costs set to decline as restructuring is completed 2013 2012 2011 2010 2009 PROFITABILITY ROE (after tax), % 14.7% 17.2% 1.5% 28.5% 30.4% ROE from regular operations (after tax), % 7.8% 12.2% 12.1% 17.7% 29.9% Net interest margin (of total a
Slide 8: Income Statement
ww istandsbanki II INCOME STATEMENT
Slide 9: Income statement
Income statement Robust earnings from regular operations have been supported by gains from restructuring (NVC) ISKm FY13 FY12 FY11 FY10 FY09 Net interest income 28,430 32,940 31,225 34,874 31,984 Net fee and commission income 10,433 9,459 5,966 7,380 7,061 Net foreign exchange (loss) gain (2,423) 2,
Slide 10: Earnings from regular operations
Earnings from regular operations High ROA and ROE from regular operations show the intrinsic strength of ÍSB's core business versus peers ISKm 2013 2012 2011 2010 2009 Reported after tax profit 23,069 23,418 1,866 29,369 23,982 Net valuation changes on loans and receivables (18,239) (6,486) 1,296 (1
Slide 11: 91% of operating income from NII & NFC
91% of operating income from NII & NFC Focus on long‐term stable cash flows, core operations continue to generate majority of total income TOTAL OPERATING INCOME NET INTEREST INCOME (NII) ISKm ISKm ‐ 5% ‐ 11% 31,984 34,874 31,225 32,940 28,430 47,649 2009 2010 2011 2012 2013 44,712 42,597 NET FEE AN
Slide 12: Results from cost projects coming through
Results from cost projects coming through Cost increase since 2009 largely due to mergers, new subsidiaries and inflation TOTAL OPERATING EXPENSES COST / INCOME RATIO 1) ISKm % 39,390 50.0% 53.8% 58.5% 36.0% 44.4% + 79% 2009 2010 2011 2012 2013 BANK TAX 28,888 ISKm 26,926 950% 18,694 2,321 ‐ 3% Byr,
Slide 13: Net valuation changes and restructuring
Net valuation changes and restructuring The net position is positive ISK 39bn, initial valuation has matched actual impairment needs well NET INTEREST INCOME AND NIM DEEP DISCOUNT AND EFFECT ON NIM 6.0% Loan book from Glitnir was 5.0% Deep discount was initially divided into two parts: acquired
Slide 14: Retail banking largest driver of income
Retail banking largest driver of income NFC income has increased on the back of more market activity in Iceland TOTAL OPERATING INCOME (ISKm, %) NET PROFIT SPLIT NII INCOME SPLIT Retail banking is by far the 24,193 largest driver of total operating income, followed by 5%1% 3%2% corporate banking 1
Slide 15: Tax & levies paid to various institutions
Tax & levies paid to various institutions Taxation has increased considerably in recent years ISKm 2013 2012 2011 2010 2009 Taxation in general has increased considerably in recent years Income tax* 7,866 6,253 75 7,214 4,678 Bank tax** 2,321 858 682 221 0 ‐ The effective income tax Financial acti
Slide 16: Good return despite growing equity base
Good return despite growing equity base Íslandsbanki’s equity has more than doubled since establishment in 2008 or 157% PROFIT AFTER TAX RETURN ON EQUITY TOTAL EQUITY ISKbn % ISKbn 167.3 + 82% 30.4% 29.4 28.5% 147.7 24.0 121.5 123.7 23.4 23.1 91.7 Byr goodwill write‐off of ISK 17.9bn 17.2% Byr goodw
Slide 17: Assets & Restructuring
FY13 G= ; | | —_ 7AM L | | | i, ; [3 ASSETS & RESTRUCTURING ela Ay ' >
Slide 18: Assets
Assets Consolidated Liquid assets ISKm 31.12.13 31.12.12 31.12.11 The three line items, Cash and balances with CB, Bonds and debt instruments, and Loans to credit institutions, amount to about ISK Cash and balances with CB 111,779 85,500 57,992 231bn, whereby ISK 202bn are considered to be liquid
Slide 19: Good sector diversification of loan portfolio
Good sector diversification of loan portfolio Conversion of FX loans to customers with ISK revenue almost completed LOANS TO CUSTOMERS LTV DISTRIBUTION OF MORTGAGES TO INDIVIDUALS % by sector, consolidated as of 31.12.2013 ISKbn, consolidated as of 31.12.2013 – average 78%* ISK 555bn LOANS TO CUSTOM
Slide 20: Restructuring on track
Restructuring on track Extensive work with households and corporates since 2008 LOAN PORTFOLIO ANALYSIS LPA (proportion of loans in restructuring, % book value) and 90 days past due (% book value) Significant success in transforming loans in ‐ 36% restructuring to performing loans 44.3% LPA rati
Slide 21: Liabilities, Liquidity & Capitalisation
FY13 LIABILITIES, LIQUIDITY & CAPITALISATION
Slide 22: Liabilities
Liabilities Consolidated Deposits ISKm 31.12.13 31.12.12 31.12.11 Customer deposits were stable, and the deposit to loan ratio of 86.7% remains strong Derivatives and short positions 11,176 18,435 13,373 Customer term deposit of parent company now 40% of total customer deposits Deposits from CB
Slide 23: Deposits remain a stable source of funding
Deposits remain a stable source of funding Normal fluctuations in deposit base DEPOSIT DEVELOPMENT AND DEPOSIT RATIO DEPOSITS FROM CUSTOMERS ISKbn, total amount, parent company ISKbn and %, parent company Deposit development Increased focus on term deposits Deposits/loans ratio is stable, may fall
Slide 24: Structurally sound balance sheet
Structurally sound balance sheet Solid funding base where deposits are the largest source of funding BALANCE SHEET COMPOSITION 31 December 2013 Prudent asset and liability management Short‐ The Bank has short term assets Other Other term that can easily be liquidated Deposits from CIs & CB to co
Slide 25: Diversification of funding continues
Diversification of funding continues Íslandsbanki issued bond in international markets in Q4 2013 Domestic bonds COVERED BONDS PERFORMING WELL IN AFTERMARKET Covered bond issue to continue at pace of ISK 10bn annually Spread on top of HFF bonds 2,0% ‐ Total outstanding covered bonds amount to ISK
Slide 26: Imbalances
Imbalances Imbalances are strictly monitored and remain within acceptable limits Currency imbalance (FX risk) FX GAP ISKbn Regulatory requirement is that the currency imbalance (total long or short) must be less than 15% of regulatory capital 40 Until the end of 1Q13 the Bank operated under a te
Slide 27: Sound management of liquidity
Sound management of liquidity Liquid assets of ISK 202bn exceed internal and external requirements LIQUIDITY BACK‐UP / DEPOSIT COVERAGE RATIO 31.12.13, parent company, ISKbn FME LIQUIDITY RATIOS Asset type ISK FX Total Cash and balances with CB 104 1 105 Balances with credit institutions ‐ 41 41 Rep
Slide 28: Sound capital position
Sound capital position Capital ratios steadily rising, with falling RWA/Total assets indicating improved credit quality CAPITAL RATIOS AND RWA Capital ratios 28.4% Capital ratios steadily rising between years, with the exemption in 26.6% 2011 due to the acquisition of BYR 25.5% 22.6% Board of Di
Slide 29: 5 key messages
5 key messages 2013 consolidated financial results 1. NFC in 2013 is up 10% YoY while NII decreasing in line with expectations as discount, following the acquisition of Glitnir loan book, is being amortized 2. Administrative expenses excluding one‐offs, was down 3% YoY or 7% in real terms, rendering
Slide 30: Disclaimer
Disclaimer Important information All information contained in this presentation should be regarded as The forward‐looking statements made represent Íslandsbanki’s preliminary and based on company data available at the time of the current expectations, plans or forecasts of its future results and pre
Slide 31: Thank you
Thank you